M&A and Partnering Surges as Rare Disease Financings Slow in January

Rare disease therapeutics companies managed to hold their own in January, as the precision medicine technologies these companies employ continued to attract private investors and pharma companies even as public markets remained sour on biotech.

While total funding raised through equity and debt by rare disease drug developers fell 53 percent in January compared to the same period a year ago, public market activity slowed at a greater rate as public companies raised just $350 million in equity and debt offerings during the month, down 85 percent from the $2.4 billion raised in January 2021.

After a boom run over the pas few years, biotech IPOs slowed. Still, two rare disease focused companies managed initial public offerings in the first month of the year: Amylyx Pharmaceuticals raised $190 million and Vigil Neuroscience raised $98 million. Both companies are focused on neurodegenerative diseases.

Venture investment in all therapeutics developers fell 28.7 percent in the month compared to January 2021, it rose 9.4 percent for rare disease focused companies to $812 million. Companies focused on genetic medicines targeting DNA or RNA, data sciences, and genomic tools were the main beneficiaries of new funding.

Maze Therapeutics raised $190 million to support advancing its nine precision medicines programs for both rare and common genetically defined diseases with high unmet need using its a proprietary purpose-built, end-to-end platform that combines human genetic data, functional genomic tools, and data science technology to map novel connections between known genes and their influence on susceptibility, timing of onset and rate of disease progression.

SalioGen Therapeutics raised $115 million in series B financing to advance development of its Gene Coding platform, which it describes as a new category of genetic medicine that is designed to turn on, turn off, or modify the function of any gene in the genome.

Korro Bio raised $116 million in series B to advance its proprietary editing platform that co-opts the endogenous human RNA editing system, combining data-driven design with off-the-shelf chemistry and delivery to achieve highly selective RNA editing.

Metagenomi raised $175 million to advance the company’s lead gene editing therapeutic programs through preclinical development and into the clinic, expand its manufacturing, automation, and AI infrastructure, and further develop its toolbox of next-generation gene editing systems.

Companies developing therapies for rare diseases entered potentially $9.8 billion in partnering and research collaborations focused on gene editing/CRISPR and gene therapy. Deal value at signing was up 365 percent over last January at $633 million, and equaled 6.4 percent of the total potential payout.

Rare disease drug developers entered three significant collaborations at the start of the annual J.P. Morgan Healthcare Conference week. Two deals focus on gene editing—Pfizer’s $1.4 billion collaboration with Beam Therapeutics, Bayer’s $1 billion plus deal with Mammoth Biosciences—while Acadia Pharmaceuticals’ $967 million deal with Stoke Therapeutics is focused on RNA-based treatments.

Pfizer entered a four-year, exclusive research collaboration with Beam Therapeutics, valued at up to $1.4 billion, to advance Beam’s novel in vivo base editing programs for three targets for rare genetic diseases of the liver, muscle, and central nervous system. Beam’s base editing technologies are designed to enable a new class of precision genetic medicines that target a single base in the genome without making a double-stranded break in the DNA to create a more precise and efficient edit compared to traditional gene editing methods.

Beam will receive an upfront payment of $300 million and, assuming Pfizer exercises its opt-in license rights for all three targets, is eligible for development, regulatory and commercial milestone payments for potential total deal consideration of up to $1.4 billion.

Bayer entered a strategic collaboration and option agreement with Mammoth Biosciences for the use of Mammoth’s ultra-small CRISPR systems to develop in vivo gene editing therapies with a focus on liver-targeted diseases. Mammoth Biosciences’ proprietary toolkit of ultra-small Cas enzymes, including Cas14 and Casɸ, allows for expanded gene editing to be combined with targeted systemic delivery. Under the agreement, Bayer gains access to this novel gene editing technology, which offers the potential of an advanced in vivo applicability due to the ultra-compact size of these novel CRISPR systems.

Mammoth Biosciences will receive an upfront payment of $40 million and is eligible to receive target option exercise fees as well as potential future payments in the magnitude of more than $1 billion upon successful achievement of certain research, development, and commercial milestones across five preselected in vivo indications with a first focus on liver-targeted diseases.

Acadia Pharmaceuticals entered a collaboration with Stoke Therapeutics to discover, develop, and commercialize novel RNA-based medicines for the potential treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system, including SYNGAP1 syndrome, Rett syndrome (MECP2), and an undisclosed neurodevelopmental target of mutual interest.

Stoke will receive an upfront payment of $60 million and is eligible to receive up to $907 million in milestones as well as royalties on future sales. Stoke applies its research platform TANGO (Targeted Augmentation of Nuclear Gene Output) to diseases in which one copy of a gene functions normally and the other is mutated to design antisense oligonucleotides (ASOs) that bind to pre-mRNA and help the functional genes produce more protein. TANGO aims to restore missing proteins by increasing – or stoking – protein output from healthy genes, thus compensating for the mutant copy of the gene.

The rout of biotech share prices has also made M&A transactions more favorable for pharma buyers. While there were no really big buyouts of therapeutic drug developers in January, total potential M&A deal values rose 25.7 percent for all therapeutics, and 240 percent for rare disease drug developers, fueled by UCB’s decision to acquire Zogenix for $1.9 billion, representing a 72 percent premium to the biotech’s share price based on the 30-day volume weighted average closing stock price prior to signing.

The acquisition provides UCB with Fintepla, a drug that complements its existing symptomatic treatments, bringing significant and differentiated value to patients suffering from Dravet syndrome and, if approved, from seizures associated with Lennox-Gastaut syndrome and potentially other rare epilepsies. UCB said the deal also enhances its epilepsy pipeline and strategic priorities in rare/orphan diseases and adds to the company’s topline growth.